Nasdaq vs. DJIA

The Nasdaq has outperformed the Dow 30 pretty handily year to date with a gain of 2.37% versus the Dow's change of -10.27%. For those interested, in the bottom chart we highlight the historical ratio of the Dow to the Nasdaq. When the line is rising, the Dow is outperforming, and vice versa for a declining line. The Internet Bubble is very apparent in the chart, as the ratio dropped below two at one point in early 2000.

Since 2004, however, the ratio's range has been very tight (between 4.7 and 5.8). As the markets fell in 2008, the Dow gained share versus the Nasdaq, but in recent months, the ratio has moved to the bottom of its range. The ratio hasn't typically stayed in this tight of a range for this long of time, so we're probably due for some relative outperformance by either index in the coming years.

click to enlarge

Comments

[Mistrofan:]

Somehow normal. Nasdaq companies have much lower currency exposure than DOW30. And debt/equity ratios lower.

Apr 20 05:36 PM

[pelicanpete:]

So one or the other will outperform in the coming year(s).

And so....

Thanks for nothing, maybe. Or thanks for something (I think).

Apr 20 07:14 PM

[granger:]

Some think that the NASDAQ will continue out performance. Many of its components were cleansed in the Internet Bubble collapse. They learned their lesson and are running leaner and with more cash.

In a sense, they have all read taken their medicine. How long that lasts, I have not idea.

Apr 22 03:01 AM